This Week In Ag #142
For Mom, it was like starring in the movie “Groundhog Day.” It happened every time Dad returned from a trip to the farm equipment dealership to pick up a part. He’d stomp into the kitchen, place a part on the table and ask, “Do you know what they give for this?” It wasn’t really a question; it was more of a declaration. Even if she had known what the part was for or how much it cost, she never got a chance to answer. He would blurt out the price in disgust, grab a Pepsi from the refrigerator, then stomp back out to make the necessary repair.
Maybe it’s a good thing Dad isn’t around to see what’s happening today. The price of farm equipment parts has risen a whopping 69% during this decade. That’s even higher than fertilizer costs for corn (45%) and soybeans (61%). All while crop prices have plummeted 50% in the past three years. And while the machines may be assembled in the USA, many of these parts are sourced outside our borders.
Equipment parts are never very high on the list of items farmers look forward to purchasing. These expenses rank right up there with interest notes and late-season pesticides. Oh sure, they enjoy their tractors, combines and other shiny objects. And they understand the concept of maintenance.
But with parts, there’s usually the double whammy. As the saying goes, combines never break down in the spring. Frustration over downtime during the busy season is elevated when you see the eye-popping price tag of a bearing. Green or red, it doesn’t seem to matter.
In the budgeting process, farmers do account for repairs and breakdowns. But in today’s climate of razor-thin margins and rising costs of parts and service calls – many dealers are now charging farmers around $250 per hour for labor – it doesn’t take much to turn profit into loss.
Back when I farmed, one of the keys to sustaining a farming business was performing your own repairs and maintenance. When something broke, you’d grab a handful of wrenches, fire up the welder, and attack the problem. A sympathetic shop foreman at the dealership could also help guide you through the process, provided you bought the parts from them.
But those days are mostly over. Now, due to all the electronics, specialized diagnostic equipment is required to perform many repairs. Equipment is only available at equipment dealerships. In some cases, tractors, sprayers and combines will shut down until a service technician arrives. Nothing like having a $500,000 investment sit idle during your busy season.
This reliance on dealers is annually costing US farmers over $3 billion in downtime losses and an additional $1.2 billion in excess repairs. I’ve talked to farmers who have waited several days, even weeks, for dealers to arrive at their farms. This has led to ongoing lawsuits against John Deere for the “right to repair.”
All of which makes you want to grab a Pepsi and stomp out the door.
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